Client Alert: Governor Carney Signs New Wage History Law that Prohibits Employers from Asking Job Candidates about Compensation History

On Wednesday, June 14, 2017, Delaware Governor John Carney signed into law a new bill prohibiting employers from asking about a job applicant’s prior compensation history. This new law amends Chapter 7, Title 19 of the Delaware Code relating to unlawful employment practices. Beginning in December 2017, an employer may no longer seek information about, or screen an applicant based upon, the applicant’s past wages or benefits. 

The purpose of the new law, according to Governor Carney, is to assist in closing the gender wage gap. Proponents of the legislation believe that by prohibiting an employer from obtaining information about a job candidate’s past compensation, the employer will be unable to take such information into consideration when drafting the candidate’s offer and terms of employment. Senate Majority Leader Margaret Rose Henry noted the salary history law takes "real steps to protect women in the workforce where it often matters most: the hiring table.” Governor Carney Signs Legislation to Address Gender Pay Gap (June 14, 2017), News.Delaware.gov, http://news.delaware.gov/2017/06/14/governor-carney-signs-legislation-to-address-gender-pay-gap/. Senate Majority Leader Henry believes that this new law will help prevent the proliferation of long-term wage discrimination.

Though an employer may not seek information about a candidate’s pay history, the law expressly permits an employer to negotiate compensation with the candidate, and a candidate may volunteer pay history information (although one can readily foresee a dispute over whether such disclosure was, in fact, voluntary). Additionally, an employer may seek an applicant’s compensation history for verification purposes after the candidate has accepted an offer and terms of employment. If an employer is found to have violated the prohibitions of the salary history law, the employer is subject to fines ranging from $1,000 to $5,000 for the first offense and $5,000 to $10,000 for each subsequent offense. Employers are not liable, however, for non-employee agents, such as recruiters, who are seeking candidates on the employer’s behalf, provided that the employer informs the agent of the restrictions on obtaining salary history information and instructs the agent to comply. 

To ensure adherence to the salary history law, Delaware employers are advised to phase out questions and recruiting policies that probe compensation history, and train interviewers accordingly. Employers also should instruct their outside recruiting firms to avoid compensation history questions (and document such instructions in writing). We will continue to update you on any developments with the implementation of this new law and other employment-related legislation.

About Potter Anderson

Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 100 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.